GPhA IMS Report Shows Reduction in Drug Costs

AUGUST 05, 2013

Generic medications brought to market as a result of patent settlements with brand name manufacturers led to a $25.5 billion reduction in drug costs over an 8-year period, according to an IMS Institute for Healthcare Informatics report conducted for the Generic Pharmaceutical Association (GPhA).

The average annual savings per year from the 33 molecule settlements analyzed amounted to $3.2 billion from 2005 to 2012, the report said. The 33 molecules were introduced in generic form an average of 81 months prior to the brand name patent expiring, with savings on each molecule ranging from $0.1 million to more than $4 billion during the 8-year period.

The federal government amassed approximately 1/3 of the total savings, which amounted to $8.3 billion over the 8-year period.

Although IMS cannot calculate the extent of future savings exactly, it predicted the remaining savings from the 33 settlements would total $61.7 billion if current trends continued through the brand name’s patent expiration.

According to GPhA President and CEO Ralph G. Neas, the report supports the controversial practice of patent settlements and also contributes to the reduction in drug expenditures.

“For years, opponents of pharmaceutical patent settlements with consideration have stated that settlements create a cost for consumers, the government, and others,” he said in the press release. “This new analysis provides the most current, complete, and transparent estimate of the impact of patent settlements on health costs, and it shows that the opposite is true. In particular, the new analysis estimates that patent settlements—including those with consideration—have led to billions in savings . . . This is critical for lawmakers to understand, because any further restrictions on settlements will put these savings at risk.”